In our December 1, 2009 publication entitled “Canadian Housing: First In, First Out, But Where to From Here?”, we expected home sales to reach 475K units in 2010. With Q1/2010 data now available, we still expect the same level of transactions to take place for the year as a whole.
While sales in Q1 were slightly higher than our late-2009 forecast, we view the strength as borrowing from future sales in a move by buyers and sellers to preempt regulatory and interest rate changes. This is evidenced by the fact that much of the strength emanates from B.C. and Ontario, where the perception is that the upcoming implementation of the harmonized sales tax (HST) in July will raise transaction costs. Nationwide, however, the anticipation of higher interest rates has also played an important role in the currently observable strength in activity.
Our price forecast for 2010 as a whole also remains largely unchanged, with the average home transacted expected to appreciate by 9% from last year to reach an annual average just shy of $350K. We still expect annual sales to decline by 10-12% next year, reaching a still decent 420K units. Read the rest of the report
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